Tuesday, April 22, 2014

Saturday, July 9, 2011The Court of Appeal of the State of California, Third Appellate District,recently held that a trial court improperly took judicial notice of anassignment which purported to establish a bank's interest in the subjectproperty, and reversed the trial court's summary judgment order in favorof the bank defending a foreclosure sale.

Plaintiffs lost their home in a California nonjudicial foreclosure sale,and then brought suit to set aside the sale. Deutsche Bank National TrustCompany ("Deutsche Bank") and California Reconveyance Corporation ("CRC")asserted that they were the beneficiary and trustee under a deed of trustsecured by the property.

Plaintiffs alleged among things that neither Deutsche Bank nor CRC had avalid interest in the property. To support the validity of theirinterests, Deutsche Bank and CRC asked the trial court to take judicialnotice of various recorded documents, including an Assignment of Deed ofTrust (the "assignment"). That document recited that Deutsche Bank wasassigned all interest in the deed of trust by an intermediate beneficiary,and identified the original beneficiary to that deed of trust. They alsoprovided a declaration by an employee of CRC stating that recordeddocuments indicated that Deutsche Bank had been assigned the Deed ofTrust.

Deutsche Bank and CRC moved for summary judgment, which the trial courtgranted. Plaintiffs appealed.

As you may recall, California law provides that "[t]aking judicial noticeof a document is not the same as accepting the truth of its contents oraccepting a particular interpretation of its meaning." Joslin v. H.A.S.Ins. Brokerage (1986) 184 Cal. App. 3d 369, 374. Further, although acourt may take judicial notice of a recorded deed, a court may not "takejudicial notice of factual matters stated therein." Love v. Wolf (1964)226 Cal. App. 2d 378, 403.

Although the trial court took judicial notice of the assignment thatrecited that Deutsche Bank was the beneficiary under a deed of trust, theCourt noted that "this fact is hearsay and disputed." Specifically, inthe appellate court's view, Deutsche Bank and CRC offered no evidence toestablish that the purported intermediate beneficiary in fact held thebeneficial interest.

Therefore, the Court held that the assignment was not a valid basis onwhich to grant summary judgment.

The Court found the declaration of the CRC employee to be similarlyinadequate, as it did not "affirmatively show that [declarant could]competently testify" that Deutsche Bank was the beneficiary. Further, theCourt noted that the employee's declaration merely concerned what therecorded documents "indicated," as opposed to the accuracy of the factualcontents of those documents.

Because in the appellate court's view Deutsche Bank and CRC "failed topresent facts to establish that [Deutsche Bank] was beneficiary and CRCwas trustee" under the deed of trust, the Court held that triable issuesof material fact remained as to Plaintiffs' various causes of action.Therefore, the Court reversed the lower court's order granting summaryjudgment to Deutsche Bank.

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